Medicare Recovery Audit Contractors

Despite all of the controversies surrounding the tactics used by Medicare Recovery Audit Contractors (RAC), it cannot be disputed that the program has saved Medicare a significant amount of money through its audits of Part A and B claims. In 2014 alone, the RAC program returned $2.57 billion dollars in "improper payments" to the Medicare program.

CMS is so pleased with the returns that is recently released a request for information for recommendations on how it could most effectively expand the RAC program to Medicare Part C, also knows as Medicare Advantage (MA), to examine the accuracy of risk adjustment payments made to MA Plans.

MA plans are paid a flat amount per enrollee by Medicare to cover all Medicare-covered benefits for each enrollee. This payment for each enrollee is risk-adjusted and there is concern that MA plans are over-inflating risk scores by taking advantage of the codes that generally led to higher risk scores. Essentially, the more diagnosis or conditions attributed to an enrollee, the higher their risk score will likely be. However, now every diagnosis attributed to an enrollee actually requires medical care.

CMS performs its own audits called Risk Adjustment Data Validation (RADV) audits to verify the accuracy of the diagnosis data submitted for risk-adjustment payments. RADV audits are only performed on a small sample of MA plans each year. CMS is considering expanding its current authority to utilize the RAC program for purposes of program integrity to conduct its own audits on MA plans that are not also subject to a CMS RADV audit.

Though not officially set in stone yet, this RFI indicates that CMS is seriously considering expanding the RAC audits to MA plans in the near future.